When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.
Trade Alert - (BA) – BUY
BUY the Boeing (BA) May 2023 $170-$175 in-the-money vertical Bull Call debit spread at $4.30 or best
Opening Trade
4-14-2023
expiration date: May 19, 2023
Portfolio weighting: 10%
Number of Contracts = 25 contracts
If you don’t do options, buy the stock. My target for (BA) this year is $300, up 50%.
The company just ceased deliveries of its 737 MAX due to a bulkhead problem from a third-party supplier, taking the stock down a shocking 7%. This is an easy fix and existing planes remain flying.
There is in fact a global short squeeze on airplanes ongoing.
The 737 MAX will shortly be flying again, the company’s largest selling product. With the airline business booming a global aircraft shortage has emerged. The end of the trade wars with China will bring a resurgence of orders there.
And Boeing just surpassed Airbus in aircraft deliveries in Q1 for the first time in four years and I expect that gap to increase.
This is a very conservative trade as we get major support from the 200-day moving average at $175.89. The payoff is certainly worth 24 days of exposure.
I am therefore buying the Boeing (BA) May 2023 $170-$175 in-the-money vertical Bull Call debit spread at $4.30 or best.
Don’t pay more than $4.60 or you’ll be chasing.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done, cancel your order and increase your bid by 10 cents with a second order.
The 737 MAX will shortly be flying again, the company’s largest selling product. With the airline business booming a global aircraft shortage has emerged. The end of the trade wars with China will bring a resurgence of orders there. And Boeing just surpassed Airbus in aircraft deliveries in Q1 for the first time in four years and I expect that gap to increase.
The rest of its customers, the major US airlines, are about to enjoy a renaissance
And I have to admit that I am partial to this company, as I am one of the few living rated pilots for the WWII B-17 bombers flown at airshows. There are only eight planes left from an original production run of 12,731.
During the 1990’s the last of the WWII bomber pilots were dying off and the fear was that no one would be left to pilot the flying examples left. I made a generous donation to the Experimental Aircraft Association and then climbed into the cockpit.
For more about this fable company, see my extensive research piece below.
This is a bet that Boeing (BA) will not fall below $175 by the May 19 option expiration day in 24 trading days.
Here are the specific trades you need to enter this position:
Buy 25 May 2023 (BA) $170 calls at………….………$33.00
Sell short 25 May 2023 (BA) $175 puts at………....$28.70
Net Cost:……………………..…….………..………….….....$4.30
Potential Profit: $5.00 - $4.30 = $0.70
(25 X 100 X $0.70) = $1,750 or 16.28% in 24 trading days.
If you are uncertain on how to execute an options spread, please watch my training video by clicking here.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.
Don’t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
(BOEING STOCK IS READY FOR TAKEOFF), (BA)
Boeing Stock is Ready for Takeoff.
My family has a very long history with Boeing (BA). During WWII, my dad got down on his knees and kissed the runway when the B-17 bomber in which he served as tail gunner (two probable’s) made it back to Guadalcanal, despite the many holes in the fuselage.
Some 40 years later, I got down on my knees and kissed the runway when a tired and rickety Boeing 707, held together with spit and baling wire, which was first delivered as Dwight Eisenhower’s Air Force One in 1955, flew me and the rest of Reagan’s White House Press Corp to Tokyo.
I even tried to buy my own B-17 bomber in the 90s but was outbid by Paul Allen on behalf of his new Flying Heritage Collection at Washington’s Paine Field. Note to self: never try to outbid Paul Allen again.
Boeing Built Them to Come Home
So when I received an invitation from senior management to inspect the plane a week before its formal launch, I carved out the extra time from my Seattle strategy luncheon to make a quick trip to the Everett, Washington production facility.
Driving there, you are overwhelmed by the enormous scale of things, with a gigantic hanger lined with spanking new 737s in various stages of colorfully painted foreign airline logos. If Picasso painted on a grand scale, as Christo did, this is what the masterpiece would look like.
The 737 is such a great leap forward on so many fronts that airlines will be forced to buy the plane in large numbers just to stay competitive with each other, as they did with the 747 some 40 years ago.
Fuel efficiency is 50% better than the best engines currently out there. The maintenance cost is 30% lower.
All Nippon Airways, one of Boeing's largest customers, took delivery of the first 737 after a three-year delay. The company expects to reach its maximum production rate of 10 planes a month by end of 2021.
Boeing probably won’t become cash flow positive on the product until it has delivered 200-300 aircraft, probably sometime in 2023. After that, the economies of scale really kick in. The company is believed to have some $17-$23 billion in research and development tied up in the plane.
Boeing’s immensely profitable defense business still accounts for more than half of revenues. The 737 MAX will no doubt deliver a huge kicker for earnings. Its main competitor, Airbus, does have a minor problem in that its planes keep falling apart fully loaded with passengers.
If you can get (BA) under $160, you’d be getting a best of breed company at a mongrel price.
